Thursday, November 4, 2010

In a strange twist to at least some parts of Canada, the nation seems to be degenerating into a country as nationalist and socialist as they come, as evidenced by their rejection of the bid by BHP Billiton (NYSE:BHP) for fertilizer giant Potash Corp. (NYSE:POT).

The alleged and unexplained reason for the rejection was the ambiguous idea it wasn't a "net benefit" to Canada.

Saskatchewan Premier Brad Wall, who is already being hailed as a hero from what is nothing other than protectionism, is considered now to be a rising star, showing the impetus behind the populist stand he took for Canada, of course.

While some local and provincial politicians in Canada may get some gain out of this, the very public nature of the issue put Canada in a bad light, and flies in the face of their being considered a good country to invest in.

Although the unproven assertion in the past that tax revenue would be lost if they deal went through was the main rallying point of the public debate, when the decision was announced, there was no reason given other than the tired, old idea it wasn't for the net benefit of Canada.

Canpotex, which is the marketing arm of the Canadian potash industry comprised of Mosaic (NYSE:MOS), Agrium (NYSE:AGU) and Potash Corp., is one of the largest and most powerful monopolies in the world, and competes with the Belarusian Potash Company, their chief rival, who is just as powerful in their markets. They also opposed the BHP bid for Potash.

There will be a huge backlash over this as time goes on, not only from the perspective of protectionism, but of greed by the unholy marriage of business and government, which are both maintaining fixed prices and supply of potash in order to keep the margins up and the government coffers of Saskatchewan filled.

When the backlash will come will be the rising costs of food, which will ultimately be traced back to the rejection of the BHP bid, which if it had been approved, would have resulted in finally breaking up this immoral monopoly, and resulted in prices of fertilizer falling.

That's the lack of honesty from Canada in this matter, as it isn't too hard to realize if more fertilizer is sold at better prices, the turnover of product generates similar, if not more, revenue. Just look at Wal-Mart (NYSE:WMT) as one of the best examples of that for their inventory, which they turn over so many times it makes up for the lower margins.

We'll be hear to continually remind readers of the outrage this will be seen as in the future. The best thing that could happen would be for this cartel to be broken up and real free markets and businesses competing against each other, not fixing prices to maintain margins and government payouts.

Amazing to see Canada starting to act like former communist countries in terms of control of businesses at a time they're experimenting more with free markets. Now we have comrades right on the American border.